TIDMDRS
DRS Data and Research Services plc ('the Group')
Annual Results Announcement
Highlights of business
-- Turnover at GBP18,095,000, a decrease of 9.8%
-- Profit before tax GBP1,269,000, a decrease of 2.5%
-- Profit after tax GBP1,389,000, an increase of 25.0%
-- International Education revenue increased by 20.8% to GBP4,880,000
-- Recommended final dividend of 0.4p
Sir David Brown, Chairman, commented:
"2013 was an important year for DRS, with the Group delivering a solid
operational performance and tangible progress in the execution of its
strategy."
Chairman's Statement
Principal Activities
I am pleased to report that in 2013 the Group traded broadly in line
with expectations. Group revenue for the year was GBP18,095,000 (2012:
GBP20,071,000) and profit before tax was GBP1,269,000 (2012:
GBP1,302,000).
Basic earnings per share benefited from a Corporation Tax credit of
GBP120,000 and increased for a fifth successive year to 4.38p (2012:
3.50p). The Board recommends that the final dividend be maintained at
0.4p per share (2012: 0.4p).
Overall performance in our Education market continues to be strong. A
solid performance in the UK which saw UK Education revenue increase by
1.37% to GBP10,570,000 (2012: GBP10,427,000), and international
education revenue grew by 20.8% to GBP4,880,000 (2012: GBP4,039,000).
As expected, non-Education revenue decreased to GBP2,645,000 (2012:
GBP5,605,000). This is because the 2012 revenue included a number of
infrequently occurring census and elections projects, the largest of
which, with a revenue of GBP2,471,000, was for the electronic counting
of the 2012 London Mayor and Assembly Elections. As expected there were
fewer high value contracts in 2013. The largest Non-Education project
during the year was the census forms printing and data scanning solution
for Myanmar, approximately 78% of which was delivered in 2013. Adjusting
for the significant 2012 London Mayor and Assembly Elections contract,
like-for-like total Group revenue was up 2.8% on last year.
2013 was an important year for DRS, with the Group demonstrating
tangible progress in the execution of its strategy. A key goal was to
establish ourselves in the overseas electronic marking market, which was
achieved. The signing of key partnerships for the distribution of the
DRS electronic marking software solution (e-Marker(R)) to the Indian and
African education markets and the completion of several e-Marker(R)
pilot projects in these regions laid important foundations for
increasing international growth. This strategic progress was reflected
in the growth we saw in our overseas education market revenue for the
fifth successive year.
In August 2013 a key milestone was achieved for the Group's core UK
business when we agreed a two-year extension, to September 2016, of the
agreement with AQA Education for the provision of e-Marker(R)
examination services.
In the non-Education market, we signed a Long Term Agreement with the
United Nations Population Fund (UNFPA) in June 2013 which provides a
framework for future contracts to be awarded for international census
projects. We also successfully concluded the first sale under that
agreement for the provision of forms and a data scanning solution for
the Myanmar census to be held in 2014. The initial deliveries were made
in 2013 and we expect to complete the contract in 2014.
Outlook
DRS has had a good year, delivering a solid operational performance and
achieving its cornerstone strategic goals. Looking forward, while we
continue to see some risk from volume reductions in the UK in the medium
term as a result of the anticipated structural changes to academic
qualifications in the UK secondary education market, the international
opportunities over the same period are expected both to balance these
and to provide opportunities for growth.
The objective of the Group continues to be to maintain its position in
the UK market and at the same time to seize opportunities for
geographical diversification in selected markets overseas, with a
particular focus on those markets in which the Group believes that
long-term scaleable growth of its core examination processing solutions,
including e-Marker(R), can realistically be secured.
In March 2014 we were delighted to be able to announce that DRS and its
joint arrangement partner in IntElect(R), Election Reform Services
Limited, have been selected to provide electronic counting for the 2016
London Mayor and Assembly Elections, as we did in 2012.
DRS expects to continue to deliver other high value projects in the
Elections and Census space, including further opportunities under the
UNFPA Long Term Agreement. These are by their nature not annually
recurring opportunities, with each opportunity needing individually to
be won in a strongly competitive environment. However they tend to be of
a high value and are integral to the Group's business focus.
Sir David Brown
Chairman
31 March 2014
Chief Executive's Statement
Overview of the year
2013 saw the business continue to deliver on the strategy to increase
revenue from Education, with an overall growth in Education revenues of
6.80% to GBP15,450,000 (2012: GBP14,466,000). Sustained demand in our
core UK Education market delivered a small increase in revenue of 1.37%
to GBP10,570,000 (2012: GBP10,427,000).
Initial projects for the delivery of DRS e-Marker(R) and MCQ solutions
and related services in India and Africa were completed and the
Company's performance in these markets continues to develop. During the
year this led to an increase of 20.82% in international education
revenue to GBP4,880,000 (2012: GBP4,039,000).
An expected reduction in non-Education revenue to GBP2,645,000 (2012:
GBP5,605,000), which was as a result of fewer large scale census and
elections projects, meant that the Group achieved an overall revenue for
the year of GBP18,095,000 (2012: GBP20,071,000) and profit before tax of
GBP1,269,000 (2012: GBP1,302,000), a performance that was broadly in
line with expectations.
Administrative expenses have increased by more than inflation between
2012 and 2013 owing to the appointment of key people to strengthen the
management team. However, overall total costs in the business have been
reduced by 0.5% of revenue.
Financial Performance
Elections and
Education Commercial Census Total
GBP000's 2013 2012 2013 2012 2013 2012 2013 2012
UK Sales 10,570 10,427 39 26 11 2,485 10,620 12,938
International
Sales 4,880 4,039 563 300 2,032 2,794 7,475 7,133
Total 15,450 14,466 602 326 2,043 5,279 18,095 20,071
UK Sales
UK overall sales in 2013 were GBP10,620,000, below 2012 performance at
GBP12,938,000 as a result of an expected decrease in non-Education
revenue. This decrease was primarily because 2012 included revenue of
GBP2,471,000 for the electronic counting of the 2012 London Mayor and
Assembly Elections and there was no similar project in 2013.
However, in August 2013 we were pleased to announce that we have agreed
a two-year extension (to September 2016) of the agreement with AQA
Education, a leading UK provider of academic qualifications, for the
provision of e-Marker(R) examination software and services. We continue
to work with AQA Education and our other UK clients to support the
transition in their business which is arising from the government's
plans to reform GCSEs and GCE A-Levels. These reforms will see the
removal of modularisation, a move to a numerical grading system and the
abolition of course work. The plans are for selected subjects to be
ready for teaching in 2015 and the first exams to take place in 2017.
International Sales
During 2013 DRS experienced incremental demand from several key overseas
markets, particularly in Africa. As a result international sales
increased by 4.79% to GBP7,475,000 (2012: GBP7,133,000).
The Group made progress in the execution of its strategy to expand
education products and services into new overseas markets, with the
signing of strategic partner agreements with Globarena and Edutech in
India. Globarena is a well established organisation providing learning
and assessment solutions to the Indian education market and Edutech is a
specialist provider of education solutions and technology to India and
the Middle East.
In the non-Education market, DRS signed a Long Term Agreement with the
United Nations Population Fund (UNFPA) in June 2013. This Agreement
provides a framework for contracts to be awarded for international
census projects. Earlier in the year we successfully completed a pilot
project for a census for Myanmar in south-east Asia and following this
were pleased to be awarded the contract for the provision of the full
census solution, including forms, technology, training and support.
Myanmar has a population of approximately 60 million people and is
undertaking its first census for thirty years. The project requires the
design, printing and shipping of 16 million specially formulated
questionnaires, which, after the census in April 2014, will be scanned
and analysed. Approximately 78% of the contract was delivered in 2013.
Dividend Policy
The Directors propose a final dividend of 0.4p per share (2012: 0.4p).
The Board follows a dividend policy which provides a return to
shareholders whilst retaining sufficient cash to continue to fund the
development of the Group's products.
Research and Development
Research and development is a fundamental part of DRS' strategy. A
structured programme of work to generate new products for our education
business and the PhotoScribe(R) scanners has resulted in increased
investment. Total expenditure on all product development during 2013,
which included e-Marker(R) amortisation, was GBP2,589,000 (2012:
GBP1,902,000). Only costs related to the creation of new functionality
were capitalised. The remaining costs including amortisation and
amounting to GBP1,384,000 (2012: GBP1,373,000) have been expensed
through the Income Statement.
e-Marker(R)
DRS' largest development programme continues to be its examination
marking solution, e-Marker(R). The e-Marker(R) roadmap for the current
generation of the product saw the release of new versions of the
software during 2013 which added functionality in support of new and
existing business. Further improvements are planned for 2014 relating to
the release of a series of components of the next generation of the
e-Marker(R) platform which will provide improvements over the next few
years to customers in the UK and internationally. This output is the
foundation of continued development in DRS' examination product suite,
enhancing and ultimately replacing the current e-Marker(R) product.
PhotoScribe(R)
In 2012 development work began on the next generation of PhotoScribe(R)
scanning machines. In 2013 a new platform for a new range of machines
was produced that can handle larger documents than the current PS900
range. The new machines should deliver faster scanning throughput with
greater paper handling tolerances and produce higher definition images.
A prototype machine is being completed, and the intention is to have a
new model available in the second half of 2015.
Liquidity and Treasury Management
The Group held GBP3,680,000 in cash at the end of 2013 (2012:
GBP3,990,000). The GBP310,000 decline in cash holding over 2013 is
offset by a GBP683,000 increase in trade receivables as a result of a
high volume of sales during December for which 92% of the payments were
received in January 2014. The Group maintains its cash holding at such
levels in order to have the funds available to support its working
capital requirements and to be able to fund product development and
deliver large election and census contracts.
The Group's policy continues to be to take a cautious approach to
Treasury management with a view to minimising its exposure to risk. Only
short-term investments that do not put the capital at risk are
considered and the Group's cash holding is split between three banks to
minimise exposure to potential risk associated with a bank failure.
The Group's principal bank through which normal business activity is
transacted continues to be Barclays Bank plc. DRS Data Services Limited
has a GBP250,000 overdraft facility and a GBP180,000 credit line to
cover operational performance bonds required in the general line of
business. In January 2013 the Group extended its mortgage facility with
Barclays Bank plc to 2018. The balance on this mortgage at the end of
2013 was GBP1,731,000.
In view of these arrangements the Directors believe the access to cash
resources is adequate to meet the foreseeable needs of the business over
the next 12 months.
Key performance indicators (KPIs)
The Company uses a number of performance indicators throughout the
business to monitor the Group's performance. The seven KPIs presented
below are considered to be the main drivers monitoring that performance
is in line with the Group's strategy.
2013 2012 2011 2010 2009
Financial
Total revenue (GBP000) 18,095 20,071 15,980 17,102 14,431
International education revenue
(GBP000) 4,880 4,039 2,778 2,570 2,443
Operating return on sales(#1) 7.0% 6.5% 6.8% 9.7% (0.9%)
Research and Development expenditure 2,484 1,738 1,286 1,868 2,182
Earnings per share 4.38 3.50 2.66 1.74 (2.28)
Non-financial
Employees average length of
service(#2) 7.19 7.48 6.25 5.85 5.93
Total energy consumed(#3) 1.73 1.79 1.55 1.86 2.20
#1 ratio of profit before income tax adjusted for discontinued
operations expressed as a percentage of total revenue
#2 average length of service in years of permanent employees in the
Group
#3 reflects the total usage of electricity and gas consumed by the
Group in gigawatt hours (GWh)
1 Total Revenue
Revenue performance tracks the level of activity of the business.
Monitoring revenue provides a means of measuring growth in the business.
Elections and census projects tend to be large-scale, infrequent and
non-recurring and this leads to significant fluctuations in the Group's
revenue. The focus on examinations and assessment within education
provides the opportunity to build a stable base of consistent recurring
revenue.
In 2013 there was a year-on-year decline of GBP1,976,000 in overall
revenue as a consequence of the London Mayor and Assembly Elections
contributing revenue of GBP2,471,000 in 2012. After adjusting for this
non-recurring revenue item, like-for-like revenue increased in 2013 by
2.8% driven primarily by a 20.8% increase in international education
revenue.
2 International Education Revenue
Particular focus is given to international education revenue which is
seen as a principal area for the Group to generate sustainable sales
growth in Africa and India. 2013 saw a 20.8% growth in the Group's
international education revenue. At present this growth is primarily
being achieved in Africa.
3 Research and Development expenditure (excluding amortisation)
The Group bases its business approach on delivering a high level of
technical excellence and by forging long term relationships with its
customers. Investment in software and hardware products to maintain a
competitive advantage is very important. Research and Development
expenditure is recorded on a monthly basis to monitor the level of
expenditure and ensure investment in comparison to the level of
recognised revenue provides a balance between spend and profitability.
There are currently two main product development activities. Firstly,
there is a new version of the e-Marker(R) examination marking product
under development and the first components of the new product are
expected to be released in the second half of 2014 which will enable us
to offer a broader range of examination marking solutions to our
international customers. Secondly, a new version of DRS' PhotoScribe(R)
scanner is planned for the second half of 2015. The existing level of
investment is planned to continue throughout 2014 and 2015.
4 Operating return on sales
The operating return on sales is based on profit before income tax
adjusted for discontinued operations* expressed as a percentage of total
revenue. The strategy and business model of the Group covers three very
different market sectors and the solutions delivered into these markets
often involve an element of tailoring to meet customers' needs.
Monitoring the direct cost of project delivery and ensuring adequate
controls are in place to ensure they are delivered within budgeted
project costs is an important part of the internal controls within the
business. The operating return on sales of 7.0% shows an increase of
0.5% over 2012 which was due to the lower than expected level of
profitability on the 2012 London Mayor and Assembly elections, but is
consistent with 2011.
*The (loss)/profit before income tax figures for 2009 and 2010 were
adjusted by GBP780,000 and GBP328,000 respectively for discontinued
operations in respect of the sale of Peladon Software Inc in September
2010.
5 Earnings per Share
Earnings per share is a principal measure used by the Board to measure
the overall profitability of the Group. The Board measures earnings per
share as part of the performance criteria for the Executive Directors'
long term incentives and it provides a standard by which shareholder
returns are assessed.
The increase in earnings per share over the last three years is
primarily due to increased investment in the Group's products resulting
in increased research and development tax credits.
6 Employees' average length of service
Retaining staff and ensuring the right mix of skills is maintained is
particularly important to DRS as the work undertaken requires highly
trained staff to deliver large complex solutions to plan. The purpose of
monitoring the average length of service of our employees is to check
that we are retaining the experience required to maintain our
competitive edge. In 2013 the Group employed an average of 255 full time
equivalent employees (2012: 249) of which 186 (2012: 177) were permanent
monthly paid and 69 (2012: 72) were weekly paid temporary workers that
cover the peaks of operational activity. The average length of service
calculation is based on the permanent monthly workforce.
7 Total energy consumed
The Board is conscious of its social responsibility to use energy more
efficiently and is continually seeking ways to reduce unnecessary
consumption. Overall energy usage in 2013 decreased by 3.5% compared to
2012.
Employees
We respect and value the individuality and diversity that each of our
employees brings to the business. We are committed to equal
opportunities and the development of our people to realise their
potential, in line with best practice and in accordance with our
Investors In People accreditation. As at 31 December 2013 117 of our
employees out of a total of 204 were male and 87 were female. Of these
32 were senior managers, 22 of whom were male and 10 were female. In
terms of the Company's Board of Directors there were 6 Directors, 4 male
and 2 female.
Markets
DRS operates in over 50 countries across three market sectors: Education,
Elections and Census.
Our core business is delivering time-critical, large-scale, logistically
challenging solutions for examination processing, elections and
population censuses. We implement complete solutions using our extensive
expertise in document design, printing, scanning of forms, software
development, logistics, project management and consultancy.
The unique combination of domain expertise, application software,
scanner technology and specialised printing and scanning services
provides clients with robust end-to-end solutions for major data capture
and processing projects.
Education
Our education business is focused on providing awarding and assessment
bodies, schools, colleges and universities in the UK and overseas with
secure data capture and examination processing products and specialist
services.
These products and services fall into two main categories:
1. DRS Marking and Examination software and services including:
-- e-Marker(R) software and services for on-line electronic
examination marking;
-- specialised Multiple Choice Questionnaire (MCQ) marking
software;
-- on-site professional services for in-house operations; and
-- full service bureau operations, providing secure receipt and
storage of scripts, scanning and imaging of completed exam answer
booklets and electronic delivery of on-line marking.
1. Scanning equipment and forms production including:
-- DRS award winning PhotoScribe(R) PS900 series imaging mark readers:
robust, high speed, network-ready form scanners able to capture complex
data in real time at speeds of up to 10,500 forms per hour;
-- exam entry and registration forms production including photo
capture;
-- bespoke examination scripts production including fully
optimised examiner answer and mark sheets for electronic capture; and
-- MCQ answer forms and exam marking forms production and processing.
DRS is a long-standing provider of online examination marking services
in the UK. Awarding bodies and professional bodies have been using
electronic marking to mark high-stakes, high-volume, general
qualifications such as GCSE and GCE A-level examinations since 2002. AQA
Education, a leading UK provider of academic qualifications, remains the
Group's largest customer overall, amongst a wide range of awarding
bodies and other examining entities in the UK and overseas.
Elections
DRS offers an end-to-end solution for electronically counted elections
worldwide including form design and printing, hardware, software,
project support and training. We cover statutory and non-statutory
elections including national parliamentary elections, legislative and
local council elections as well as employee and trade union ballots.
DRS Election software, scanning equipment and services include the
following:
-- electronic Counting (e-Counting) solutions for statutory and
non-statutory elections including national elections, local and regional
council elections and by-elections; postal ballot options plus, with
partners, internet and telephone ballots;
-- ballot paper design and forms production; and
-- scanning and data capture of time-critical data using our PhotoScribe(R)
technology for ballot scanning as well as voter registration projects.
Census
DRS Census services provide data capture solutions for large-scale
censuses including paper-based national or regional population censuses
and specialised industrial, commercial and agricultural censuses. Any
census is a complex undertaking presenting many challenges, especially
concerning the collection and dissemination of the data.
It is also recognised that every census project is unique and that
market requirements are constantly changing. DRS has therefore developed
a flexible, adaptable solution combined with proven and innovative data
capture methods and technology.
DRS is able to provide complete bespoke solutions, including:
-- customised software (OMR, ICR, Barcode and Image);
-- forms design and printing;
-- DRS PhotoScribe(R) scanners;
-- PC/Server hardware;
-- support services;
-- consultancy;
-- project management.
The services cover all stages from planning through to project
implementation, document scanning of enumeration/census forms using our
scanners, data processing and export of the data to the chosen analysis
package.
Strategy and Business Model - Education
Our core education business focuses on the delivery of solutions for
student registration and examination processing and the electronic
marking of high-stakes, high-volume examinations.
The business strategy is focused on carefully selected geographies that
the Board feels represent the best opportunities for sustainable and
recurring growth for DRS's education products and services, with a
particular focus on Africa and India, including both secondary and
further education examination processing. The education market is a
particular focus because it offers regular and recurring business
opportunities arising from the annual cycle of examinations. Key drivers
include the size and growth of the student populations in these markets,
the investment being made in education by governments and individuals
and the potential benefits that electronic marking offers in terms of
increased efficiency, data collection and the reduction of error, fraud
and bias.
In the UK the Education market is mature and the changes that are
occurring in secondary education qualifications are causing a reduction
in the number of examinations taken. We continue to work with a number
of UK awarding bodies to develop products and services that provide
improvements in marking quality and capability.
The main opportunities for growth are to build on our existing education
business in Africa, where the business has a long established presence
and to use the knowledge gained in this market to develop opportunities
in India, which has suitable student numbers and a similar education
structure to the UK. The Board's view is that these markets offer the
necessary scale of opportunity, in terms of current numbers of students,
student volume growth and examination volumes to meet growth
aspirations.
Over the years we have built up a deep knowledge of the data capture and
processing requirements in this area and we are able to work with our
partners and customers to deliver the software and hardware solutions to
meet local requirements. DRS has built strong relationships with
international agencies, national governments and public and private
sector specialist organisations, including national and regional
awarding, assessment and educational bodies across the globe. Our
professional services organisation is also equipped to deliver best
practice techniques and methodologies to these organisations to enable
them to achieve the required results.
Electronic marking is now starting to gain acceptance in many regions of
the world due to its proven benefits in marking quality, security, the
removal of bias, improved administration and reporting of the marking
process and better use of markers, both in standardisation and
cost-effectiveness.
It is our intention to offer these services and solutions, including the
e-Marker(R) electronic marking solution, either directly or in
conjunction with carefully selected strategic partners in each market.
We are currently working with a number of partners in Africa and India
to further develop these services.
The business model in the UK is direct sales operated by DRS staff
offering a full bureau service including scanning, and the e-Marker(R)
software offered as a service.
In the overseas markets, professional services to support the use of
e-Marker(R) may be offered directly or delivered through carefully
selected service provider partners. In either case the preferred revenue
model for e-Marker(R) is a recurring model, with a per-transaction (per
examination script) fee being charged for use of the licence. Other
software solutions, such as MCQ may be licensed directly to clients for
an up-front initial licence fee.
Strategy and Business Model - Elections and Census
The Group will continue to pursue large-scale, one-off opportunities in
the elections and census markets, based on dedicated DRS software
applications and the Company's PhotoScribe(R) scanners. The focus is on
national population censuses, voter registration and ballot counting for
large statutory and non-statutory elections.
Our customers require a combination of data capture, processing and
reporting solutions as well as the delivery of related services which
include operational training, document printing, scanning and data
handling. These solutions and services in combination result in the
provision of a full end-to-end service.
A key driver for the Census market is the practice of holding them on a
decennial cycle, with the majority of censuses being clustered on or
around the decade end. Outside of those peaks there are fewer projects,
primarily in those countries which have not held a census for some time
or decide to carry out an intercensal population survey.
Objectives
As a business we continue to focus on the three market sectors of
Education, Elections and Census that we believe have a common and
complementary need for solutions which provide for large-scale secure
capture and processing of high-stakes data, primarily from manually
completed, paper-based forms and the ouput of the results to a fixed
schedule. These results might be election counts, census results or
examination marks.
Two of the markets, Census and Elections, offer opportunities that while
they are high value are, by their nature, non-recurring and tend to be
project-based requiring specific customisation. By contrast, events in
the Education market, in particular exam series, are more regular and
repeatable and offer the opportunity for recurring revenue streams.
Because of this we have a particular objective to derive a greater
proportion of revenue from the Education market through electronic
marking of examinations.
Education accounts for 85% of turnover and is believed to provide the
best growth opportunities.
DRS has been investing in new products to support the growth of this
business, including e-Marker(R) and MCQ. A key objective for the
business is the delivery of new products, features and related
professional services to provide a broader range of electronic marking
capabilities to meet the needs of our UK and International customers.The
business is investing in research and development with a view to
launching an enhanced electronic marking platform in the coming year
that will form the basis of new pilot projects in selected locations.
Our products and services may be sold directly or through a certified
network of strategic partners. Future growth opportunities will arise
from the development of these channels, allowing us to open up new
territories.We have a particular focus on identifying and signing up new
partners to support this expansion.
Current Trading and Outlook
In 2013 we made good progress in strategic terms with the achievement of
a number of milestones against the Group's core strategy. These
milestones included a re-focusing of the organisation around product and
service delivery, the signing of new partners in target markets in
Africa and India and the appointment of a number of key people to
strengthen the management team.
These steps, together with the delivery of pilot projects in significant
territories for our examination processing and electronic marking
solutions, mean that DRS has built a foundation to leverage future
opportunities.
In 2013 the business delivered growth in international education revenue,
which currently accounts for 27% of Group revenue. Looking ahead to 2014
we anticipate that, in the absence of large scale Census and Election
projects, we will focus on the international education market, where we
expect to continue to make steady progress. The UK market in 2014 will
be impacted by structural changes to secondary education qualifications
that have reduced the numbers of exams being taken in January and March.
Some of this volume is expected to move to the summer series. This has
the consequence of reducing revenue in the first half year and
increasing revenue in the second half of the year.
In the medium term we shall continue to deliver Census and Election
projects as they become available including, as recently announced, the
project to deliver the e-counting solution for the 2016 London Mayor and
Assembly Elections.
Overall the Education market opportunities remain encouraging though we
recognise that the business in the UK in the medium term will be
strongly influenced by the Government's structural changes to UK
secondary school examinations.
Our Education solutions, including e-Marker(R), are expected to continue
to perform in many of our target markets and recent progress
demonstrates that the product range has good growth prospects both for
new business sales and for ongoing repeat business.
In the international markets the opportunities are driven by the size of
the education markets in India and Africa, the increasing levels of
investment in education and the expected growth in student numbers.
While challenges arise from the relative maturity of the technology
infrastructure in certain locations, particularly Africa, to support a
transition from largely manual processes to the higher degree of
automation that we offer, we are confident DRS remains well positioned
to grow the business over the medium and long term.
Steve Gowers
Chief Executive Officer
31 March 2014
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Strategic Report, the
Annual Report, the Remuneration Report and the financial statements in
accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for
each financial year. Under that law the Directors have to prepare the
financial statements in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the European Union. Under
company law the Directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the
state of affairs and profit or loss of the Company and Group for that
period. In preparing these financial statements, the Directors are
required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
and
-- state whether applicable IFRSs have been followed, subject to any
material departures disclosed and explained in the financial statements.
The Directors are responsible for keeping adequate accounting records
that are sufficient to show and explain the Company's transactions and
disclose with reasonable accuracy at any time the financial position of
the Company and enable them to ensure that the financial statements and
the Remuneration Report comply with the Companies Act 2006 and Article 4
of the IAS Regulation. They are also responsible for safeguarding the
assets of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The Directors confirm that:
-- in so far as each of the Directors is aware there is no relevant audit
information of which the Company's auditor is unaware; and
-- the Directors have taken all steps that they ought to have taken as
Directors in order to make themselves aware of any relevant audit
information and to establish that the auditor is aware of that
information.
The Directors are responsible for preparing this Annual Report in
accordance with applicable law and regulations.
They are responsible for the maintenance and integrity of the corporate
and financial information included on the Company's website. Legislation
in the United Kingdom governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
To the best of our knowledge:
-- the group financial statements, prepared in accordance with the IFRSs as
adopted by the European Union, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Company and the
undertakings included in the consolidation taken as a whole;
-- this Annual Report and the Financial Statements taken as a whole are fair,
balanced and understandable; and
-- the narrative sections of this Annual Report are consistent with the
Financial Statements and accurately reflect the Company's performance.
BY ORDER OF THE BOARD
S J Gowers A M Tebbutt
Chief Executive Officer Finance Director
31 March 2014
Consolidated Income Statement
Total 2013 Total 2012
Notes GBP000 GBP000
Revenue 1 18,095 20,071
Cost of sales (11,286) (13,280)
Gross profit 6,809 6,791
Other operating income 3 25 49
Selling and marketing costs (1,155) (1,313)
Administrative expenses (4,327) (4,080)
Finance costs 5 (83) (145)
Profit before income tax 1,269 1,302
Tax credit/(charge) 6 120 (191)
Profit for the period attributable to owners of the
parent 1,389 1,111
Earnings per share
Basic earnings per share 18 4.38p 3.50p
Diluted earnings per share 18 4.30p 3.49p
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Profit for the period 1,389 1,111
Other comprehensive income - -
Total comprehensive profit for the period attributable
to owners of the parent 1,389 1,111
Consolidated statement of financial position
2013 2012
Notes GBP000 GBP000
ASSETS
Non-current assets
Property, plant and equipment 7 2,908 3,055
Intangible assets 8 1,794 746
Deferred income tax assets 14 110 153
4,812 3,954
Current assets
Inventories 9 974 1,440
Trade and other receivables 10 4,056 3,039
Current tax assets 264 -
Cash and cash equivalents 11 3,680 3,990
8,974 8,469
Total assets 13,786 12,423
EQUITY
Capital and reserves attributable to the Company's
equity holders
Share capital 12 1,731 1,731
Share premium account 13 5,377 5,377
Capital redemption reserve 13 115 115
Treasury shares 12 (1,166) (1,166)
Own shares reserve 13 (306) (306)
Retained earnings 2,996 1,723
Total equity 8,747 7,474
LIABILITIES
Non-current liabilities
Borrowings 16 1,505 1,630
Deferred income tax liabilities 14 222 136
Long-term provisions 17 89 60
1,816 1,826
Current liabilities
Trade and other payables 15 3,223 3,024
Current income tax liabilities - 99
3,223 3,123
Total liabilities 5,039 4,949
Total equity and liabilities 13,786 12,423
The financial statements were approved by the Board of Directors on 31
March 2014 and signed on its behalf by:
S J Gowers A M Tebbutt
Chief Executive Officer Finance Director
DRS Data and Research Services plc
Registered Company Number: 0959401
Consolidated statement of changes in equity
Retained
Share capital Share premium account Capital redemption reserve Treasury shares Own shares reserve earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 January
2012 1,731 5,377 115 (1,166) (313) 730 6,474
Divided paid
to
shareholders - - - - - (111) (111)
Own shares
vesting - - - - 7 (7) -
Transactions
with owners - - - - 7 (118) (111)
Profit for the
period - - - - - 1,111 1,111
Other
comprehensive
income - - - - - - -
Total
comprehensive
income for
the period - - - - - 1,111 1,111
At 31 December
2012 1,731 5,377 115 (1,166) (306) 1,723 7,474
At 1 January
2013 1,731 5,377 115 (1,166) (306) 1,723 7,474
Dividend paid
to
shareholders - - - - - (127) (127)
Employee share
based
compensation - - - - - 11 11
Transactions
with owners - - - - - (116) (116)
Profit for the
period - - - - - 1,389 1,389
Other
comprehensive
income - - - - - - -
Total
comprehensive
income for
the period - - - - - 1,389 1.389
At 31 December
2013 1,731 5,377 115 (1,166) (306) 2,996 8,747
Consolidated statement of cash flows
2013 2012
Notes GBP000 GBP000
Cash flow from operating activities
Profit after taxation 1,389 1,111
Adjustments for:
Tax (credit)/charge (120) 191
Depreciation of property, plant and equipment 326 369
Amortisation of intangible assets 235 267
IFRS 2 charge in respect of LTIP shares 11 -
Loss/(profit) on sale of property, plant & equipment
and intangibles 7 (21)
Exchange (gains)/losses recognised in the Income
Statement (7) 60
Investment income (14) (19)
Interest expense 81 80
Decrease in inventories 466 1,080
Increase in trade and other receivables (1,017) (728)
Increase/(decrease) in trade and other payables 199 (1,601)
Increase in long-term provisions 29 60
Cash generated from operations 1,585 849
Interest paid (81) (80)
Income tax paid (114) (278)
Net cash used in operating activities (195) (358)
Cash flows from investing activities
Purchase of property, plant and equipment (PPE) (180) (250)
Proceeds from sale of PPE 21 21
Purchase of intangible assets (1,310) (805)
Interest received 14 19
Net cash used in investing activities (1,455) (1,015)
Cash flows from financing activities
Dividends paid to shareholders (127) (111)
Repayment of loan (125) (226)
Net cash used in financing activities (252) (337)
Net decrease in cash and cash equivalents (317) (861)
Cash and cash equivalents at beginning of period 3,990 4,911
Exchange increase/(decrease) on cash 7 (60)
Cash and cash equivalents at end of period 20 3,680 3,990
Notes to the financial statements
for the year ended 31 December 2013
1. Segment information
The principal activities of the Group continue to be the provision of
data capture services, the manufacture, sale and support of optical and
image scanning equipment, design and printing of documentation used for
data capture and associated software and bureau services. Approximately
half of the Group's revenue relates to products and services and the
other half relates to providing tailored data capture solutions. The
companies in the Group are organised functionally, with each function of
the business specialising in its own area of expertise. Project managers
look to the functional areas to provide the appropriate tailored mix of
products and services to fulfil each specific contract. In turn the
functional areas are supported by indirect cost centre departments such
as Research and Development and Information Systems.
Management consider that there is only one operating segment, as this is
the lowest level at which discrete financial information is available
and is reflected by a single set of management accounts that are used
throughout the Group. However, it reviews revenue according to various
segments and the revenue split is disclosed below.
The delivery of market focused solutions results in a 'many to many'
relationship between department costs and revenue streams. The
individual standard costs of each type of supply are carefully
controlled, but due to the effect sales mix has on recovery rates,
reporting the relative profitability of the revenue streams would not be
consistent with management processes within the Company.
The revenue analysis generated from external customers for the year
ended 31 December 2013 is as follows:
Education revenue Non-education revenue
Examination & Assessment Other Commercial Elections & Census Total
GBP000 GBP000 GBP000 GBP000 GBP000
Region
UK 10,057 513 39 11 10,620
Africa 4,709 25 494 135 5,363
Rest of
world 128 18 69 1,897 2,112
Total 14,894 556 602 2,043 18,095
Revenue arising from specific products and related
services thereon:
eMarker(R) 9,713
e-Counting 94
All of the Group's revenue from continuing operations of GBP18,095,000
was generated from UK operations.
DRS' largest customer generated revenue of GBP8,669,000 in 2013 (2012:
GBP8,444,000) and is shown under UK examinations and assessment. DRS'
second largest customer generated revenue of GBP2,365,000 in 2013 (2012:
GBP1,794,000) and is shown under Africa examinations and assessment.
There are no other customers that account for more than 10% of external
revenue.
The revenue analysis generated from external customers for the year
ended 31 December 2012 is as follows:
Education revenue Non-education revenue
Examination & Assessment Other Commercial Elections & Census Total
GBP000 GBP000 GBP000 GBP000 GBP000
Region
UK 9,780 647 26 2,485 12,938
Africa 3,951 28 5 2,147 6,131
Rest of
world 28 32 295 647 1,002
Total 13,759 707 326 5,279 20,071
Revenue arising from specific products and related
services thereon:
eMarker(R) 9,113
eCounting 3,075
The contract to count the 2012 London Mayor and Assembly elections
electronically was won by IntElect(R) , a joint arrangement between DRS
and ERS (Electoral Reform Services Limited), resulting in the Group
recognising revenue of GBP2,471,000 in the year within the UK census and
elections segment.
1. Revenue and profit before tax
The significant categories of revenue recognised during the period are:
2013 2012
GBP000 GBP000
Sale of goods 6,509 7,028
Rendering of services 11,434 12,583
Operating lease income 152 460
18,095 20,071
Profit on ordinary activities before taxation is stated after:
2013 2012
GBP000 GBP000
Auditor's remuneration:
Audit services 6 6
Other services 39 39
Depreciation 326 369
Amortisation 235 267
Hire of plant and machinery 63 23
R&D expense 2,484 1,738
Share-based payment charge 11 -
Auditor's remuneration relating to other services comprises:
2013 2012
GBP000 GBP000
-- audit of subsidiaries pursuant to legislation 25 29
-- advice on IFRS 8 4
-- interim review 6 6
39 39
1. Other operating income
2013 2012
GBP000 GBP000
Interest income
- bank interest 14 19
- Peladon deferred consideration 2 25
Profit on foreign exchange (realised and unrealised) 9 5
25 49
The profit on foreign exchange gains relates to exchange rate
differences on US Dollar and Euro transactions and the restatement of
monetary assets at the year end.
The Peladon deferred consideration arises from the sale of Peladon
Software Inc. to The Software Construction Company Inc., Texas during
September 2010. The initial consideration was $1 followed by additional
consideration to DRS over the course of the five year period following
completion, based on the future gross revenues of Peladon Software Inc.
and its subsidiaries that are generated by the sales of licences for all
DocXP(TM) software. The percentage of such gross revenues that the Group
will be entitled to ranges from 5% to 10% in each of the five years
following completion. Such additional consideration is capped at a
maximum amount of US $500,000.
Management's best estimate of deferred consideration under the earn-out
agreement for the remaining two years of the arrangement is GBP10,000
(2012: GBP27,000).
1. Directors and employee benefit expense
Staff costs during the year were:
2013 2012
GBP000 GBP000
Wages and salaries 7,717 7,313
Social security costs 885 790
Share options granted to Directors and employees 11 -
Pension costs - defined contribution plans 679 566
9,292 8,669
The average number of full time equivalents of the Group during the year
was:
2013 2012
Print and bureau services 116 115
Hardware and software services 89 78
Sales and marketing 16 20
Administration 34 36
255 249
Remuneration in respect of Directors was as follows:
2013 2012
GBP000 GBP000
Emoluments 513 618
Pension contributions to money purchase pension schemes 56 53
569 671
Key management remuneration:
2013 2012
GBP000 GBP000
Short-term employee benefits 513 618
Post-employment benefits 56 53
Share-based payments 11 -
580 671
All of the main Board Directors are considered to be the key management
personnel of the Group. Further details on Directors' remuneration and
share options are set out in the Directors' Remuneration Report.
1. Finance costs
2013 2012
GBP000 GBP000
Interest expense:
- bank borrowings (81) (80)
- loss on foreign exchange (realised and unrealised) (2) (65)
(83) (145)
The loss on foreign exchange relates to exchange rate differences on US
Dollar and Euro transactions and the restatement of monetary assets at
the year end.
1. Income tax expense
2013 2012
GBP000 GBP000
Current tax - domestic - 196
Foreign taxation 20 -
Adjustment in respect of previous period (269) -
Total current tax (249) 196
Deferred tax current year (Note ) 55 (5)
Deferred tax prior year (Note ) 74 -
(120) 191
Domestic income tax is calculated at 23.25% (2012: 24.5%) of the
estimated assessable profit for the year.
Additional development expenditure was identified in the current year as
qualifying expenditure for research and development tax credits that
reduced previous periods' tax charge by GBP269k. Details of this
expenditure are provided within the section on Research and Development
in the Strategic Report.
The charge for the year can be reconciled to the profit per the Income
Statement as follows:
2013
GBP000 2012 GBP000
Profit before tax 1,269 1,302
Tax at domestic income tax rate of 23.25% (2012: 24.5%) 295 319
Tax effect of expenses that are not deductible in
determining taxable profit 8 18
Income not taxable for tax purposes - (8)
Additional deduction for R&D expenditure (476) (138)
Chargeable gains 1 7
Foreign tax credits 20 -
Effect of marginal rate - (8)
Effect of change in tax rates 17 1
Deferred tax not recognised 211 -
Adjustment in respect of previous periods (196) -
Tax expense (120) 191
1. Property, plant and equipment
Freehold Fixtures
land & Computer & Rental
Total buildings equipment fittings Plant & machinery machines Motor vehicles
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 January 2012
Cost 11,235 2,900 2,158 2,546 3,024 601 6
Accumulated depreciation (8,061) (320) (1,919) (2,343) (2,872) (601) (6)
Net book amount 3,174 2,580 239 203 152 - -
For the year ended
31 December 2012
Opening net amount at
1 January 2012 3,174 2,580 239 203 152 - -
Additions 250 - 52 78 120 - -
Depreciation charge (369) (67) (119) (87) (96) - -
Closing net book amount at
31 December 2012 3,055 2,513 172 194 176 - -
At 31 December 2012
Cost 11,386 2,900 2,192 2,558 3,144 586 6
Accumulated depreciation (8,331) (387) (2,020) (2,364) (2,968) (586) (6)
Net book amount 3,055 2,513 172 194 176 - -
For the year ended
31 December 2013
Opening net amount at
1 January 2013 3,055 2,513 172 194 176 - -
Additions 180 - 59 21 100 - -
Disposals (1) - - (1) - - -
Depreciation charge (326) (67) (117) (66) (76) - -
Closing net book amount at
31 December 2013 2,908 2,446 114 148 200 - -
At 31 December 2013
Cost 10,237 2,900 1,185 2,473 3,226 447 6
Accumulated depreciation (7,329) (454) (1,071) (2,325) (3,026) (447) (6)
Net book amount 2,908 2,446 114 148 200 - -
During November 2012, in accordance with extending the mortgage on the
Linford Wood property, Barclays Bank plc conducted a commercial
valuation of the property based on tenanted occupancy which calculated
the current market value at GBP1,600,000. The decline in the commercial
valuation reflects the general fall in the value of commercial property
within the locality and does not alter its condition or expected useful
life.
The acquisition of the Linford Wood property was justified on the
savings gained against the rental cost of leasing. The use and
justification remain the same. However, to reflect the decline in
residual value of the property a decision was taken to increase the
depreciation charge by GBP27,000 per annum from 1 January 2012 to more
accurately reflect the use of this asset over its remaining expected
life.
An impairment review was undertaken in January 2014 to consider whether
the property is impaired in accordance with IAS36. This review did not
result in an impairment of the property.
Bank borrowings at 31 December 2013 are secured on the Linford Wood land
and buildings to the value of GBP1,731,000 (2012: GBP1,855,000). See
Note .
The fall in year on year cost of assets is the result of disposals made
during the year with nil net book value.
1. Intangible assets
Computer
Total software Development expenditure
GBP000 GBP000 GBP000
At 1 January 2012
Cost 4,401 990 3,411
Accumulated amortisation (4,193) (946) (3,247)
Net book amount 208 44 164
For the year ended 31 December 2012
Opening net amount at 1 January
2012 208 44 164
Additions 805 321 484
Amortisation charge (267) (103) (164)
Closing net book amount at 31
December 2012 746 262 484
At 31 December 2012
Cost 5,206 1,311 3,895
Accumulated amortisation and
impairment (4,460) (1,049) (3,411)
Net book amount 746 262 484
For the year ended 31 December 2013
Opening net amount at 1 January
2013 746 262 484
Additions 1,310 105 1,205
Disposals (27) (27) -
Amortisation charge (235) (130) (105)
Closing net book amount at 31
December 2013 1,794 210 1,584
At 31 December 2013
Cost 6,481 1,381 5,100
Accumulated amortisation and
impairment (4,687) (1,171) (3,516)
Net book amount 1,794 210 1,584
Computer software relates to the third party software licences purchased
by the Group to be used in the normal course of its business and is
amortised over three years from the time of purchase. A check is carried
out at the end of each year to ensure that all the software is still in
use within the business.
The capitalised development expenditure covers the cost of developing
the first release of a completely new version of e-Marker(R) software
which is due to be available in the second half of 2014 plus additional
new features which enhance the original core e-Marker(R) software used
to mark examination scripts electronically within the education
marketplace. This expenditure is amortised over its expected useful life
from the month in which it becomes available for operational use. The
software is used in an operational environment and its functional
performance is continually monitored to ensure there is no impairment.
The assets making up the closing net book value will be amortised as
follows:
Computer
Total software Development expenditure
GBP000 GBP000 GBP000
Future amortisation of assets by
year
-- 2014 508 132 376
-- 2015 541 58 483
-- 2016 503 20 483
-- 2017 242 - 242
Net book amount at 31 December
2013 1,794 210 1,584
All intangible amortisation is charged to cost of sales within the
Income Statement.
1. Inventories
31 December 2013 31 December 2012
GBP000 GBP000
Raw materials 564 617
Work in progress 17 51
Finished goods 393 772
974 1,440
31 December 31 December 31 December
2013 Movement during year 2012 Movement during year 2011
GBP000 GBP000 GBP000 GBP000 GBP000
Inventory
provision
PS900 scanners 694 35 659 624 35
IntelliReg(R) - (22) 22 (154) 176
Other scanners 98 (35) 133 (27) 160
Print 11 (3) 14 (2) 16
Total 803 (25) 828 441 387
Related carrying value
PS900 scanners 780 1,160 2,204
Other scanners 12 107 118
Manufacturing inventory 792 1,267 2,322
Print inventory 182 173 198
Total 974 1,440 2,520
The cost of inventories recognised as an expense and included in cost of
sales amounted to GBP2,311,000 (2012: GBP2,909,000).
1. Trade and other receivables
31 December 2013 31 December 2012
GBP000 GBP000
Loans and receivables
Trade receivables 3,111 2,407
Less provision for impairment of
receivables (22) (1)
Trade receivables - net 3,089 2,406
Amounts recoverable on contracts 285 144
Prepayments and accrued income 682 489
4,056 3,039
There is no material difference between the fair value and the carrying
value of these assets.
The maximum credit risk exposure at the balance sheet date equates to
the fair value of trade receivables.
Standard payment terms on credit sales are 30 days net.
The trade receivables ageing analysis is as follows:
Past due
Total trade receivables Current 0 - 30 days 31 - 60 days 61 - 90 days 91 - 120 days 120+ days
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
31
December
2013 3,089 2,782 30 251 2 - 24
31
December
2012 2,406 1,733 157 249 24 - 243
The Group recognised an increase in its impairment of its trade
receivables during the year of GBP21,000 (2012: decrease GBP19,000). The
trade receivables provision movement is included in 'administrative
expenses' in the Income Statement and a breakdown is as follows:
2013 2012
GBP000 GBP000
Opening amount at 1 January 1 20
Increase/(decrease) in provision to Income Statement 21 (19)
Closing amount at 31 December 22 1
1. Cash and cash equivalents
31 December 2013 31 December 2012
GBP000 GBP000
Cash at bank and in hand 124 73
Short-term bank deposits 3,556 3,917
3,680 3,990
The effective interest rate on short-term bank deposits was 0.21% (2012:
0.48%). These deposits have an average maturity of two days (2012: three
days).
The tables below show the extent to which the Group has monetary assets
in currencies other than Sterling.
31 December 31 December 31 December 31 December
2013 2013 2012 2012
US Dollars Euro US Dollars Euro
GBP000 GBP000 GBP000 GBP000
Sterling equivalent 87 27 13 38
1. Share capital
Number of
shares Ordinary shares Treasury shares Total
At 1 January
2012 34,621,600 34,621,600 (1,930,000) 32,691,600
Balance at 31
December 2012 34,621,600 34,621,600 (1,930,000) 32,691,600
Balance at 31
December 2013 34,621,600 34,621,600 (1,930,000) 32,691,600
Ordinary shares of 5p each
at 31 December 2013 and 2012
Number GBP000
Authorised 46,000,000 2,300
Allotted, issued, called up and fully paid 34,621,600 1,731
The Company acquired 1,930,000 of its own shares through purchase
between 3 June and 15 July 2004. The price of these shares ranged
between 59p and 60p. The total amount paid to acquire these shares, net
of income tax, was GBP1,166,000 and has been deducted from shareholders'
equity. The shares are held as Treasury shares. The Company has the
right to re-issue these shares at a later date. All issued shares are
fully paid.
1. Other reserves
Total
Share premium Capital redemption Own share reserve Group
GBP000 GBP000 GBP000 GBP000
As at 1 January
2012 and 31
December 2012 5,377 115 (306) 5,186
Own shares
vesting - - - -
Balance at 31
December 2013 5,377 115 (306) 5,186
The Own Share Reserve represents the cost of shares purchased under the
Restricted Share Scheme, less those unconditionally vested in employees.
At 31 December 2013, 960,529 (2012: 960,529) shares with a market value
of GBP237,731 (2012: GBP172,895) were held. Of these 40,000 (2012:
40,000) had been conditionally gifted to employees. The Scheme
authorises the Trustees to purchase up to 5% of the issued share capital,
funded by loans from the Company. Shares so acquired are conditionally
gifted to employees and used to fulfil performance related options to
Directors and senior managers at the discretion of the Board.
1. Deferred income tax
31 December 2013 31 December 2012
GBP000 GBP000
Analysis for financial reporting purposes
Deferred tax liabilities 222 136
Deferred tax assets (110) (153)
112 (17)
At the balance sheet date legislation had been substantively enacted
which reduced the main corporation tax rate from 23% to 20%. This
reduction has been reflected in the calculation of the Group's deferred
tax assets and liabilities.
The movement in the year in the Group's net deferred tax position was as
follows:
31 December 2013 31 December 2012
GBP000 GBP000
At 1 January (17) (12)
Charge/(credit) to income for the current
year 55 (5)
Charge to income for the prior year 74 -
At 31 December 112 (17)
The following are the major deferred tax liabilities and assets
recognised by the Company and the movements thereon during the period:
R&D tax credits Capital allowances
GBP000 GBP000
At 1 January 2013 - (17)
Charge to income for the year (110) 239
At 31 December 2013 (110) 222
A deferred tax asset in respect of unrelieved tax losses has not been
recognised due to the uncertainty of the Group generating sufficient
profit against which these losses can be utilised, as the Group projects
similar high levels of development expenditure over the next three
years. The amount unprovided at 31 December 2013 is GBP211,000, using
the rate of corporation tax applicable for future years (20%).
1. Trade and other payables
31 December 2013 31 December 2012
GBP000 GBP000
Financial liabilities measured at
amortised cost
-- Trade payables 904 728
Deferred income 958 512
Social security and other taxes 223 210
Accrued expenses 912 1,348
2,997 2,798
Borrowings (see Note ) 226 226
3,223 3,024
Trade payables are contractually due within 30 days and are financial
liabilities at amortised cost.
1. Borrowings
31 December 2013 31 December 2012
GBP000 GBP000
Non-current
Bank borrowings - secured loan 1,505 1,630
Total non-current borrowings 1,505 1,630
In January 2013 the mortgage facility was extended to 7 January 2018 and
increased to GBP1,900,000 from the balance outstanding at 31 December
2013 of GBP1,731,000 (2012: GBP1,855,000). The facility from Barclays
Bank plc is secured by a fixed charge against the freehold land and
buildings to 7 January 2018. The interest rate on the five year
extension is 4.0% over base rate. Repayment of the principal shall be in
19 instalments of GBP56,400 payable quarterly commencing 31 March 2013,
followed by a final bullet payment of GBP828,400 on 7 January 2018. The
extension included a reallocation of the mortgage to the subsidiary
Company, DRS Data Services Limited, as tenant of the property.
The overdraft facility for DRS Data Services Limited is GBP250,000. It
remains secured against inventory and debtors. Interest is charged at a
variable rate of 5.0% over base rate. The facility is not currently in
use.
1. Provisions
31 December 2013 31 December 2012
GBP000 GBP000
Leasehold dilapidations provision
Current - -
Non-current 89 60
89 60
The provision is based on previous negotiations to terminate these lease
arrangements and reflects the Group's liability for dilapidation
charges payable on the expiry of all five property leases relating to
the seven business units occupied by operations in Milton Keynes. All
five leases expire on 30 November 2015.
1. Earnings per share
The calculation of basic earnings per share is based on the earnings
attributable to ordinary shareholders divided by the weighted average
number of shares in issue during the year. Shares held in Restricted
Share Scheme (see Note 13) are treated as cancelled for the purposes of
this calculation.
The calculation of diluted earnings per share is based on the basic
earnings per share, adjusted to allow for the issue of shares and the
post-tax effect of dividends and/or interest, on the assumed conversion
of all dilutive options and other dilutive potential Ordinary shares.
Reconciliations of the earnings and weighted average number of shares
used in the calculations are set out below:
Basic earnings per share
2013 2012
GBP000 GBP000
Earnings attributable to Ordinary shareholders being
profit for the period 1,389 1,111
Number Number
Weighted average number of shares 31,731,071 31,722,082
Basic profit per Ordinary share 4.38p 3.50p
Diluted earnings per share
2013 2012
GBP000 GBP000
Earnings attributable to Ordinary shareholders being
profit for the period 1,389 1,111
Number Number
Weighted average number of shares
Basic 31,731,071 31,722,082
Dilutive effect of:
- options under the Enterprise Management Incentive
Scheme 40,000 40,000
- options under LTIP option scheme 544,550 79,735
Diluted 32,315,621 31,841,817
Diluted profit per Ordinary share 4.30p 3.49p
1. Dividends per share
Amounts recognised as distributions to equity holders in this period:
2013 2012
GBP000 GBP000
Final dividend for the year ended 31 December 2012
of 0.4p per share 127
Final dividend for the year ended 31 December 2011
of 0.35p per share 111
The proposed final dividend 0.4p per share was approved by the Board on
31 March 2014. The dividend is subject to approval by the shareholders
at the 2014 Annual General Meeting and the expected cost of GBP127,000
has not been included in the liability as at 31 December 2013. If
approved, it will be paid on 30 May 2014 to shareholders on the register
at close of business on 25 April 2014.
1. Reconciliation of movements in cash and cash equivalents
Cash
1 January 2013 flow 31 December 2013
GBP000 GBP000 GBP000
Cash at bank and in hand 73 51 124
Term deposits 3,917 (361) 3,556
3,990 (310) 3,680
1. Commitments
Operating lease commitments
The Company has the following future minimum lease commitments:
Lease of land & buildings Other leases
31 December 2013 31 December 2012 31 December 2013 31 December 2012
GBP000 GBP000 GBP000 GBP000
Within
one
year 192 192 76 82
Within
two to
five
years 176 369 148 222
368 561 224 304
The Group holds five property leases relating to seven business units
occupied by operations in Milton Keynes. All five leases expire on 30
November 2015. Rent is payable quarterly in advance.
The classification of other leases relates to company vehicles that are
held under three or four year contracts, plus the company telephones,
three photocopiers and a franking machine which are held under five year
contracts. The company vehicle leases have an up-front payment of three
months in advance followed by a monthly payment, the telephone contract
payments are monthly in advance and the office equipment leases are
payable quarterly in advance.
Financial information
The financial information set out above does not constitute the
Company's statutory accounts for the years ended 31 December 2013 or
2012 but is derived from the 2013 accounts. Statutory accounts for 2012
have been delivered to the Registrar of Companies and those for 2013
will be delivered in due course. The auditor has reported on those
accounts; its report was (i) unqualified, (ii) did not include a
reference to any matters to which the auditor drew attention by way of
emphasis without qualifying the report and (iii) did not contain a
statement under section 498(2) or section 498(3) of the Companies Act
2006.
The accounting policies set out in the most recently published full
Annual Financial Report have been followed.
The full Annual Financial Report will be found on the Group website from
17 April 2014.
- End -
31 March 2014
Enquiries to:
Sally Hopwood
Company Secretary
Tel: 01908 666088
This announcement is distributed by NASDAQ OMX Corporate Solutions on
behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the information
contained therein.
Source: DRS Data & Research Services plc via Globenewswire
HUG#1773156
http://www.drs.co.uk
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